The expansion of the insurance market in Thailand has slowed over the past two years, with a growth rate of 9.23 and 5.46 percent achieved in 2014 and 2015 respectively. Although the life insurance sector showed progress from 2013-14, it dropped dramatically, its growth declining faster in 2015 at a faster rate than the country’s insurance industry as a whole.
Thailand’s political instability and economic slowdown can be named as the primary reasons behind the slow growth of the sector in recent years. Following the coup of 2014, which followed over a year of protests and civil unrest, investor confidence in the country was particularly low.
Against this backdrop, a decline in new car sales was another major factor behind the slow uptake for the sector, given motor insurance is the primary source of revenue for Thailand’s insurance industry. Although the government’s growth stimulus programme has started to have an effect on GDP growth, there are several challenges that still remain for the country’s major industries. As such, a new strategy is needed for the insurance sector if it is to thrive once more.
At this pivotal point in the sector’s development, World Finance spoke with Pravit Suksantisuwan, Deputy Managing Director at Viriyah Insurance, Thailand’s leading non-life insurer, about the current state of the market and how his company has adjusted to this rapidly changing environment.
Thai non-life insurance direct premiums
Industrial all risks
SOURCE: Viriyah Insurance
How has the non-life insurance sector performed over the last few years?
Growth of direct premiums reached a peak of 28 percent in 2012, as a result of the widely successful first car buyers government scheme. Since then, however, growth in Thailand’s non-life market has dropped dramatically, hitting 1.07 percent in 2014. In addition, new car sales in Thailand dropped sharply from 1.4 million in 2012 to only 799,594 in 2015. This downturn in car sales is expected to continue due to an oversupply within the market, which has caused many insurers to adopt a strategy of retaining existing policyholders, instead of focusing on the acquisition of new business. Consequently, a company’s renewal rate is now used to measure its ability to retain business.
During 2014 and 2015, the percentage of premium growth was relatively stable, and even indicated an upward trend. In 2015, Thailand’s general insurance industry witnessed a relatively small growth of 1.9 percent compared with the previous year. This was due to the economy’s modest GDP growth of 2.8 percent in 2015, having risen from 0.8 percent in 2014. According to the Thai General Insurance Association (TGIA), growth in Thailand’s non-life insurance market is predicted at 2.2 percent for 2016, which indicates it is expected to continue increasing in premium growth.
As for last year, there are many reasons behind the slow growth of 1.9 percent in the Thai non-life insurance industry. However, before we go further into the detail, we must first understand the current mix of business in Thailand’s non-life market.
As indicated by figures published by the TGIA, the mix of business in Thailand’s non-life market showed consistent stability from 2014 to 2015, with motor insurance products dominating the market. Indeed, voluntary and compulsory motor insurance products accounted for approximately 60 percent of the market in the past two years. As the non-life industry in Thailand is largely driven by the total premium from motor insurance business, one of the biggest factors that impacts the motor insurance business – and consequently the non-life insurance industry – is the number of cars sold each year.
What are the sector’s biggest opportunities?
Thailand is on the verge of becoming an ageing society. People are beginning to realise they need to be prepared for the future, which means finding the appropriate insurance that can help them cope with upcoming changes and challenges. As a company, we recognise this demographic shift as a new opportunity. In response, we are joining forces with major high-profile partners that already have comprehensive health service networks in place in Thailand, as well as other ASEAN countries. After much preparation, we are now in the process of launching the project in this fourth quarter.
It is also worth noting the liberalisation of the ASEAN region is a huge opportunity for us to expand to new markets and grow as a business.
What is it that differentiates Viriyah from others in the field?
What sets us apart is our unwavering attention and efforts to develop our claims service. This dedication has been recognised across the country by the trust our customers have in the company. At present, Viriyah Insurance is a non-life insurance company with a service network that covers over 90 percent of the country’s service area. We offer the most comprehensive service in terms of the number of branches, agent offices, claim centres and certified repair centres in Thailand. Our policy to focus intently on claims service development is ingrained throughout the company, from our management team to all employees and business partners. At present, the company has approximately 6,000 employees, 70 percent of whom are claims service officers.
The second thing I would add is the steady increase in policy renewal rate we have achieved. At present, Viriyah Insurance’s policy renewal rate is approximately 75 percent, which is higher than that of the entire market. We have set a goal to increase this rate every year. To realise this, we have to formulate plans, define our strategies and sales targets, as well as closely monitor and measure increases in renewal work volume in every channel and territory. This requires working closely with each of our business partners.
Most recently, we initiated the ‘100 percent renewals for growth with quality’ project to motivate our agents and brokers nationwide to ensure they follow up on their current renewal work in order to prevent possible loss of customers. With regard to other channels, such as car dealers, we have set up working teams to provide them with a customer follow-up service. Moreover, our insurance policy renewal follow-up staff force is highly trained to help customers understand the benefits of promptly renewing their insurance policies. This is a win-win arrangement that satisfies both our customers and our trade partners: car dealers.
What role does technology have to play in supporting your reputation?
We are living in the digital economy era. Modern technology is used to support business operations in many ways; it has become an important tool for business administration and management, reducing costs, reaching out to new and existing customers, while responding swiftly to their requirements.
The non-life industry in Thailand is largely driven by the total premium from motor insurance business
In order to increase our business operation efficiency, we introduced the Viriyah Smart Claim system, which is a smartphone and tablet technology that is synced with Google Maps. The system allows our claims staff to arrive quickly at incident scenes, so they take care of customers in a timely manner. The system also helps claims officers to manage ongoing cases with greater efficiency.
We also have the Viriyah Smart Adjuster (VSA) programme, which enables immediate contact and coordination with repair centres, thus promptly facilitating the claims service for our customers. This programme has reduced the labour required for assessment and approval of repair works, while it also allows for the standardisation of damage valuation and the cost of repairs. This in turn reduces costs incurred from the incorrect disbursement of spare parts, making the process more controlled and efficient. Finally, a major advantage of VSA for both our customers and us is a far shorter service time.
Introducing new technology has also enabled Viriyah to introduce ongoing customer satisfaction surveys, which is how we ensure customers always experience excellent service in line with the high standard of quality set by the company. We conduct direct customer satisfaction surveys through our customer relations officers, who make phone calls all over the country to evaluate customer satisfaction throughout the year. Furthermore, every year BrandAge, an independent marketing magazine that conducts nationwide customer surveys, conducts an annual survey on factors customers consider when buying insurance. I’m pleased to say Viriyah Insurance was ranked first among all the non-life insurance companies listed by BrandAge.
What plans do you have for the future?
The company will continue to focus on growth with quality, while also adhering to the company creed of ‘fairness is our policy’. We will maintain our leadership in claims services, which we have held for the past 24 years by offering customers comprehensive services with the highest coverage area in the country. Moreover, we have also made adjustments to our work portfolio, from 90 percent car insurance and 10 percent non-motor insurance, to 80:20. To accomplish this, we have accelerated our non-motor insurance expansion work through our personal health and insurance programmes.